Junk Bonds, Leveraged Loans Post Monthly Gains Again

By Michael Aneiro

High-yield corporate bonds gained again in November while their leveraged-loan brethren also posted some solid returns, and high-grade bonds were more or less flat. Here’s a recap:

According to the Bank of America Merrill Lynch High Yield Master II Index, junk bonds gained 0.742% in November, pushing year-to-date gains to 13.779%. The middle tier of the high-yield market, bonds with B ratings, outperformed higher- and lower-rated bonds “in part because investors rotated out of BB issues to the point where Bs are rich compared to BBs,” writes Adrian Miller of GMP Securities.

More from GMP’s Miller: “Solid full month results across credit was mostly back end loaded as early November weakness tied to President Obama’s reelection gave way to improved sentiment associated with expectations of another Fed QE program and a likely agreement on the fiscal cliff. While credit recorded solid results, on a risk adjusted basis (excess return), performance was modest at best given heightened unknowns regarding the fiscal cliff,Europe, and MENA as well as data that suggests a slowing in U.S. Q4 GDP.”